TARP repayments must go to pay off debt

Bailout money now being paid back to the federal government by banks and the auto industry will have to go to pay down the federal debt thanks to an amendment to Wall Street reform legislation sponsored by U.S. Sen. Michael Bennet, D-Colo.

The provision also shrinks the funds available under the Troubled Asset Relief Program (TARP) from $700 billion to $550 billion. That’s unlikely to pose a problem given that the total fund was never actually dispersed and that banks and other financial institutions have already repaid $180 billion of the rescue.

The amendment, which drew wide Republican support and passed by a voice vote today, prevents using the repaid funds for purposes like job creation. A jobs bill passed by the House late last year was funded in part with returned TARP funds but that bill was never approved by the Senate. Bennet’s amendment essentially kills the possibility of any similar approach.

Facing a primary in August and tough general election this fall, Bennet is casting himself as a fiscal hawk and the amendment will help burnish that image.

“This amendment will ensure that paid back bailout funds will be used to pay down the deficit, so our kids aren’t saddled with a debt Washington is unable to pay,” Bennet said after vote.

Joey Bunch has been a reporter for 28 years, including the last 12 at The Denver Post. For various newspapers he has covered the environment, water issues, politics, civil rights, sports and the casino industry.